Ulan Bator, Apr 12 (IANS): Mongolian commercial banks have imposed limitations on foreign-exchange transactions amid the country's dwindling forex reserves due to the Covid-19 pandemic and ongoing conflict between Russia and Ukraine.

Mongolia's forex reserves fell to $3.3 billion as of Tuesday, down $1.2 billion from the end of 2021, Atarbaatar Enkhjin, Head of the reserve management and financial markets department of the Bank of Mongolia, said in a statement.

The decline in forex reserves is likely the result of a 40-per cent increase in imports since the beginning of 2021, and Covid-19 restrictions have prevented the country from exporting much of its coal, its main export product, despite the high prices of raw materials in the world market.

"Also, due to the situation between Russia and Ukraine that began in late February, the uncertainty of the external environment is deteriorating beyond our expectations. Due to this, there is a certain pressure on the forex reserves and the exchange rate of the Mongolian Tugriks," Enkhjin said.

Mongolia's forex reserves stood at $4.9 billion at the end of April 2021, hitting an all-time high, according to the central bank.

Since the beginning of the conflict between Russia and Ukraine on February 24, Mongolian commercial banks have begun to impose unexpected limitations on the daily volume of transactions of $, Xinhua news agency reported.

The central bank explained that limiting $US transactions was not made by the Bank of Mongolia but by commercial banks themselves due to the lack of foreign exchange supply in the market.

In March, a daily limit of 50 million Mongolian tugriks (about $16,550) was imposed on foreign currency transactions for individuals. The amount then dropped sharply to 30 million and continued to fall to the current limit of 300,000 tugriks (about $99.3).